UK consumer confidence hits five-year low in December - GfK

Consumer confidence in the UK fell to a five-year low in December, according to a widely-followed survey released on Friday.

GfK's long-running consumer confidence index slipped to -14 this month from -13 in November, in line with expectations, with three of the five measures used to calculate the overall scored down, and two up.

Client strategy director Joe Staton said: "At -14 this month, UK consumers are ending 2018 on a pessimistic note with Christmas cheer in short supply. We are five points lower than this year’s opening score in January and were no higher than -7 this summer. This represents a more than five-year low for the index which has bumped along in negative territory since 2016.

"In the face of ever-rising costs, and the threat of higher inflation combined with uncertainty around the outcome of the Brexit negotiations, it’s no surprise that consumers are in a chilly mood of despondency and putting on a glum face when they look at the prospects for 2019. Sad to say that an unhappy and uncertain New Year beckons despite good intentions from all points on the economic and political spectrum."

The measure for the general economic situation of the country in the last 12 months dropped two points to -31 this month, its lowest level since December 2017. Meanwhile, the gauge of expectations for the general economic situation over the next 12 months fell by six points to -38.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the drop in consumers’ confidence to a five-year low provides a very clear signal that the "calamitous" Brexit process will weigh heavily on GDP growth in the fourth quarter.

"Households are their most downbeat about the economic outlook since December 2011. Their confidence in the outlook for their personal finances has held up a bit better, though it still hit a two-and-a-half year low in December. This is quite remarkable, given very low unemployment and the recent pick-up in wage growth to a 10-year high.

"Looking ahead, consumers likely will remain despondent until a no-deal Brexit is averted, but the outlook for rising real wage growth, as inflation falls further, and further marginal declines in unemployment suggests that consumers should be more upbeat in six months’ time."